5 Ways To Stop Loyalty Program Fraud
Banks and financial institutions have always been targeted by criminals for monetary gain, but, thanks to new technology and multiple layers of security, it’s getting harder to obtain customers’ information and money. So, now these same thieves and hackers are turning their attention to loyalty programs and loyalty program fraud.
Reward points and miles are worth over $48 billion in the United States alone. To consumers, reward points are a form of currency, and they need to know that the money in their loyalty programs is safe. According to research, fraud against a single member of your loyalty program can cost a company up to $17,000 in direct and indirect costs. Although most loyalty programs will replenish a customer’s points, the long-term damages have already been done.
When trust is broken, a brand’s reputation and its program often suffer severe consequences. In a recent study, 25% of loyalty members indicated they would cancel their membership if they experienced fraud, and 17% would stop buying from the brand altogether. 10 percent of a customer’s value is said to be instantly lost upon announcement of any fraudulent activity. As we previously covered, it’s much more expensive for a company to find new consumers than to keep old ones, so businesses need to make sure they keep their customers’ accounts safe.
So HOW can your business protect against loyalty fraud? Here are five ways:
- Educate Your Employees
Training and building awareness in your employees is an important step to take in cutting down fraud. If your employees can identify common examples of fraud, then they will also have the means and knowwithall to help stop it. Have pre-planned strategies in place to deal with specific situations and customers. There should also be a zero-tolerance policy for any employee or member of the company found guilty of fraudulent activity, and the repercussions must be swift and clearly communicated to other coworkers and your consumers.
- Track Activity
The ability to log loyalty program activity is an integral part of keeping your program safe. You want a loyalty program that allows you to track where purchases are made, and algorithm-based analytic tracking methods that can help detect fraudulent behaviour before it’s too late.
- Monitor Behaviour
Track recent behavior and changes to the loyalty member program. Any time there is a change to a member’s account, you should send communications to the consumer, especially when key elements such as password, email address, or physical address have been changed.
- Multiple Security Features
Multiple authentication steps, a complex password, and back-end reporting system are all must-haves for a loyalty program. The ability to stop or intercept loyalty program decisions/ movements/purchases in real-time is important.
If some activity is suspected to be fraudulent, you should respond quickly and alert various departments inside your company, such as security, IT, HR, and management. You should also contact your loyalty members to authenticate any flagged activity. Fast reaction times are crucial to protect against fraud!
The risk of fraud to your loyalty program is no joke. But if you’re smart, and you take steps to prevent fraudulent activity, it’s you who will be laughing at would-be hackers and thieves, not the other way around.
If you are looking for a program that monitors all transactions in real-time, providing transparency, reducing the possibility of fraudulent activities, and allowing for quick action to be taken in case of suspicious transactions, we invite you to come take a look at the TruCash loyalty program.
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